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Press release by Los Angeles Councilman Feuer regarding alternative business tax reform proposal, 2-16-99.
See accompanying letter.

PRESS RELEASE:

Mike Feuer
5th District Councilman
Room 309, City Hall
Los Angeles, CA 90012

For Immediate Release
Tuesday 16 February 1999		 Contact: Daniel Hinerfeld
213.473.7005

FEUER PROPOSES ALTERNATIVE BUSINESS TAX REFORM PLAN THAT BENEFITS NEW BUSINESS BUT SAVES MILLIONS

Council member Mike Feuer proposed an alternative business tax reform plan today that offers a half-million dollar exemption to start-up businesses in their first year, reduces taxes on two-thirds of Los Angeles firms, and saves $7.6 million compared to the Mayor's plan.

"This plan goes further than the others in attracting new businesses, exempting nearly 95% of start-ups from business taxes in their first year," said Feuer, a member of the Budget and Finance Committee. "It encourages firms that most benefit our economy, and results in a significantly smaller hit to the general fund."

Feuer's plan compensates for the cost of the new business exemption by focusing tax rate reductions on businesses that, according to the Mayor's criteria, most benefit the economy of Los Angeles. It provides them single rather than multiple tax rate reductions, saving $2.9 million, and reassigns the remaining businesses to the rate closest to what they currently pay, saving $4 million.

"It's important to recognize that the City may lower but not raise taxes by ordinance," Feuer said. "By offering more conservative reductions at first, this plan saves revenue and preserves long-term flexibility, allowing the Council to stimulate targeted sectors of the economy in the future."

Feuer's plan saves an additional $1.5 million by reducing the top tax category to $5.50 per thousand dollars of gross receipts instead of $5.40. It retains the Mayor's simplification proposals, and advocates aggressive tax collection and a one-time amnesty for out-of-city businesses, with increased penalties for non-compliance.

Feuer distributed his plan to the Mayor and Council Tuesday, and will offer corresponding amendments to the report of the Ad Hoc Committee on Tax reform in Council on Wednesday.